Internal changes in the Russian government on 18 Sept handed control over the production of precious metals and gems from the Economic Development Ministry to the Finance Ministry (the Russian organization that represents that government in international financial markets). This is a major change, and reflects Russian reactions to the reluctance of the West to extend more credit to Moscow. Giving the Finance Ministry more economic guns to use in negotiating deals means a major realignment in how Russia deals with the West. Russia has major percentages of the world's oil and diamonds (and 20% of the platinum), but its greatest control is over the palladium market. Russia has 80% of the world's palladium, and stockpiles the metal like other nations stockpile gold. Russia easily manipulates that market, driving prices to a record $859 per ounce by simply delaying scheduled deliveries to Japan. Palladium production is more tightly controlled by Moscow than anything else in Russia. Production and stockpile figures are state secrets, as are figures concerning the production of platinum and diamonds. Palladium (unlike the very similar platinum) has no aesthetic value as jewelry and is valuable only as an industrial commodity, but its thousands of uses (due to its high conductivity and use as a chemical catalyst) keep the metal in continuous demand. It is palladium that makes catalytic converters on Western automobiles work. Palladium is the key component of fuel cells, which are expected to reach the mass market in 2003. Global demand for palladium doubled from 1998 to 1999, with no increase in supply. Virtually all non-Russian stockpiles of Palladium were reduced to zero last year. It is likely that Finance Minister Kasyanov will use control over palladium to demand concessions from Western countries, including loans, rescheduled debt payments (Russia's foreign debt is $160 billion), and even the cancellation of some debts. Kasyanov had previously had no leverage in the international financial arena other than to warn that a desperately broke Russia was a dangerously unstable Russia. The G7 nations had bought this line for several years, but finally rejected it at the June summit, rebuking all Russian efforts to gain debt relief. Kasyanov has also moved to dismantle Norilsk Nickel, the Russian company that controls palladium production. This company is controlled by Vladimir Potanin, a Russian magnate who engineered the "loans for shares" scheme of the 1990s that wrecked the Russian economy. President Putin is said to take personal delight in dismantling Potanin's financial empire and transferring it to the state. Deputy Finance Minister Rudakov is already using Russian control over a major portion of the diamond market to seek control over companies that polish and market diamonds. Russia has also reached technological breakthroughs that allow them to produce nearly perfect synthetic diamonds in jewelry grades, not just industrial grades.--Stephen V Cole